What is a three testamentary trust arrangement (A-B-Q)?
The A share would be the portion qualifying for the marital deduction. This share (which alternatively may be in the form of an outright distribution to the surviving spouse) can provide for income to be distributed to the spouse along with an unlimited power of invasion over the principal. The B share, (generically referred to as the unified credit bypass shelter trust), is funded to the amount of the exemption equivalent of the Federal unified credit ($625,000 in 1998). This trust can provide for mandatory or discretionary income distributions to the surviving spouse or any other beneficiary(ies); limited distributions of principal to the surviving spouse are available. In effect, this B trust is an “artificial nonspouse,” ineligible for the marital deduction while forcing qualification for the Unified Credit. A popular version of the B trust is the sprinkling (life benefit) trust. The latter may be particularly useful when one spouse has a large estate and does not want any assets f